1. Personal Financial Literacy - Credit July 27, 2016 Bart Flewelling—Presenter 1

2. Personal Credit Agenda  Introduction and Overview of Personal Credit  What are the differences between debit and credit cards?  What is a check register?  What is credit history and credit reports? 2

3. Introduction of Presenter  Bart Flewelling  Worked for:  Capital One  Toyota Financial Services  MCI Worldcom (now Verizon)  Jobs include:  Project Management  Fraud Investigation  Credit Analyst 3

4. Personal Credit  Personal credit is made up of a few important things:  Credit report history  The accounts which you have established and the manner in which you pay them  Your knowledge of how to manage both to your benefit  Personal credit reflects your reputation and behaviors  Do you save money vs. spending it all?  Are you diligent in making payments to those who grant credit?  Are you paying attention to the bank and credit accounts you’ve established? 4

5. Banks…Friend or Foe?  Banks set up checking, savings, retirement, credit card and many other types of accounts  Banks can help you establish credit history and a good credit score  Banks are required by law to make sure they do not give you more credit than you can pay for  Banks will charge you fees, many fees, for establishing and using bank accounts  ATM fees for cash  Late fees for late payments  Interest charges for credit accounts  Banks can negatively affect your credit history if you pay late or less than the minimum Banks are the most common method of establishing and maintaining personal credit 5

6. Debit Cards vs Credit Cards Debit Card  Card doesn’t cost anything to use  Any transactions debited (deducted) directly from your bank account balance  Option of using PIN for greater security at point of sale  If debit card is stolen, liability for fraud charges can be up to $500 Credit Card  Card may have high interest rate added to fees for which you must make a monthly payment  Any transactions are added to your credit card balance  Only time you use PIN is to withdraw cash  If credit card stolen, usually $0 liability for fraud Both Most banks can issue debit or credit cards Both cards allow you to withdraw cash or be used at point of sale to buy things 6

7. Check Register  What is it?  A check register is a way for you to keep track of all checks, cash withdrawals, and debit card transactions  By knowing what you’ve spent, you can keep track of how much money you have left in your account  Why do you need it?  While one can keep track of transactions on-line (and download them), the register is a quick way to remember on what you spent your money  You will want to avoid what is known as an “Over Draft” as that means you have spent more than what is in your account  If you have an Over Draft, you will often be charged a large fee by your bank and any checks or payments made may be rejected  How do you keep it updated?  If you are writing a check, enter check #  Enter date of transaction  Write in the description and the amount  Deduct the amount of the transaction from your beginning balance to get an updated balance  Again you can check on-line with your bank to verify that your balance matches 7

8. Credit History and Your Credit Report Credit History—What is it?  Summary of all credit accounts you have been granted  Credit limit, balances, payments, past due statuses, addresses, and many other pieces of info Why is it important?  Past behavior is used to determine future creditworthiness  For example:  You apply for and are granted a credit card account but you do not make your payments on-time each month  When you apply for a car loan, the car finance company will likely deny your application because you do not make your payments on-time What can I do to make sure I have good credit?  Monitor your credit reports  Dispute anything on the report that is not right  Make your payments as agreed to credit accounts (on- time and at least the minimum amount)  Do not overdraw your bank accounts Credit Report—What is it?  A report that contains your credit history  A credit score is given to determine how good your credit may be How do I get it?  You can get it FREE from credit reporting agencies  You may also use free services such as Credit Sesame and Credit Karma which are also provided by the agencies Why is it important?  Credit grantors and other businesses use your credit score and report to determine if you are worthy of new credit, if you are “risky” Who other than banks use my credit report?  Landlord-rentals  Utilities like telephone, gas, electric, water  Insurance for car, house, life  Employer 8

9. Summary of Lesson  Banks can help you establish and maintain your Personal Credit…but be sure to treat them well or they will not treat you well!  Use Debit Cards to pay for expenses and avoid Credit Cards until you have a steady job  Keep track of your transactions via your Check Register and on-line, dispute any transactions that are not yours within 2 days  Request your credit report at least once per year (freecreditreport.com, etc.)  Use Credit Karma, Credit Sesame, or many other services that track your credit score on a daily basis  Review the credit report and dispute any history or transaction that is inaccurate (not yours, paid on time, credit limit inaccurate, etc.)  For more personal finance training and information, go to www.money-wise.org 9